"First-home owners need not be impatient". Michael McNamara
- Thread starter mam544
- Start date
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Dear Jason,
1. Technically speaking, the US will never "stops" buying from China per se;- even as its American Economy has already started to slow down into a Recession.
2. I agree that American demands for Chinese goods and services may fall to a certain extent, in the near future, though;- however, the real issue is to "what" extent will this demand from the US Economy falls down to such that it will ultimately cause the entire global economy to further slow down inevitably or/and neccessarily impact the Australian Economy in a significant manner subsequently?
3. Population-wise, India and China will greatly outnumber the US at this point in time and so will their domestic economic markets likely to eventually overtake the American markets over time, economically speaking.
4. I read somewhere that China has officially replaced America, as the biggest trading partner for Japan, when the Chinese President last visited Japan recently.
5. I read and heard that unlike previously when big investment monies were fllowing into the Chinese and Indian markets, respective big monies flows are now also coming out from these same India and China markets whereby they have reportedly flowed into Australia and other places, with a number of their own Asia-based MNCs now planning to relocate anew into the Vietnamese market where labour is still comparatively cheap at this point in time.
6. If you want specific facts and figures, you may want to refer to RBA's data and its own subsequent analysis and conclusions made, as officially reflected in its recent 1st Quarterly Monetary Statement 2008 below:
http://www.rba.gov.au/PublicationsA...icy/Statements/statement_on_monetary_0508.pdf
7. For your further comments and discussion, please.
8. Thank you.
Cheers,
Kenneth KOH
Agree Ken
That is the key point. The domestic growth in both of those economies is touching close to 10% which has a massive compounding effect as they keep chugging on with almost double digit grwoth. Indian economy in my opinion with very western oriented banking/ open institutions will weather any sharp downfall in global consumption much better than China. India is on track to overtake China by 2025 as the world's largest economy and there seems to be nothing remotely to indicate that the growth there will slow down. Any slow down in China will be offset by the growth in Indian economy.
The demand for Aus' commodities and minerals is only going to increase as that economy starts cranking in top gear for the next decade. Every commentator agrees on that single point, hence the logic that Aus will somehow suffer massively due to a slow down in Chinese exports (and a subsequent slow down in Aus export to China) is not correct in my opinion.
Agree again. Vietnam in its GDP growth is set to overtake China in the next few years and is gearing to be a regional powerhouse.
Again, I agree that if the peak bodies are suggesting that the worst is most likely over, then I would defer my opinion to the expert opinion. It gives even more credence to the reports from both of those institutions when they are presented in the general climate of fear and D&G.
Harris
2003 prices (plus CPI)
There isn't much science too it! From 2000 to now is when the house price growth went completely nuts. I think 50 to 60 % of it pure speculative / debt fueled craziness. And 30 to 40% of it is based on fundamentals such as population growth / poor infrastructure / choked supply. So I split those 8 years accordingly and called it as 2003.
Must add CPI of course. It is all about relative price (relative to wages, relative to other prices) rather than absolute price.
Of course, I am speaking generally though (the 8 capital city ABS stats). Different cities are at different stages.
There isn't much science too it! From 2000 to now is when the house price growth went completely nuts. I think 50 to 60 % of it pure speculative / debt fueled craziness. And 30 to 40% of it is based on fundamentals such as population growth / poor infrastructure / choked supply. So I split those 8 years accordingly and called it as 2003.
Must add CPI of course. It is all about relative price (relative to wages, relative to other prices) rather than absolute price.
Of course, I am speaking generally though (the 8 capital city ABS stats). Different cities are at different stages.
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US Treasury Secretary Henry Paulson and top Federal Reserve policy-makers have identified the housing downturn as the biggest single risk for the economy and Congress has been working feverishly on proposals for guaranteeing shaky mortgage loans to try to save homeowners from losing their homes.
On Thursday night, housing industry sources indicated that leaders of the US Senate Banking Committee had reached a deal on a broad housing rescue plan in which mortgage giants Fannie Mae and Freddie Mac will support a federal mortgage insurance fund.
The $US300 billion fund would be run by the Federal Housing Administration and would offer loan guarantees to help refinance distressed mortgages, with borrowers agreeing to forgive portions of troubled loans.
"US housing posts surprise rebound"
http://www.businessspectator.com.au...mits-up-more-than-forecast-EPGU7?OpenDocument
Originally Posted by jingo
Possibly what will happen is that rents will rise to a certain point, property values will flatten/fall and FHB's, realising that it doesn't cost much more to 'buy' a house of their own than rent, will pile back into the market. We all know what happens then....... I doubt they will enter the market in a 'staggered' fashion, most likely 'en mass', 'herd' mentality like they are currently doing to the rental market and did to the property market last year. (I was active in the Melbourne market last year and saw this happen in the extreme!).
Regards Jason
Personally i dont think people will quickly revert to 'buying in mass' in the near future. Reasons:
1) Credit crisis has made lenders and the securitisation market more conservative. Whilst the lending market should moderate downwards from the current extreems, it will mostly moderate into someform between what we are experiencing now and 'the good old times'.
2) Interest rate rises are on a long term cyclical upturn. Look at history, the 60's was charaterised with low interest rate, the 70's and 80's high interest rates and the mid 90's to now low interest rates. Greenspan, warren buffet and a number of other people have suggested this may be the case.
3) Rents rises have a lot further to go before they neutrify interest holding costs. If you look back on the mid 90's to now, rental ylds were basically decreasing together with interest rates fluctuating around 6 -8%. Out of pocket interest expenses was in the period around 2 -4%. Even with the latest rent increases we are looking at out of pocket interest expense of 4-6%. This is a big 'gap' that will need to be filled.
4)Property affordability is still poor.
If you have property and its securly financed then hold it, but im not buying more property for the moment.
Possibly what will happen is that rents will rise to a certain point, property values will flatten/fall and FHB's, realising that it doesn't cost much more to 'buy' a house of their own than rent, will pile back into the market. We all know what happens then....... I doubt they will enter the market in a 'staggered' fashion, most likely 'en mass', 'herd' mentality like they are currently doing to the rental market and did to the property market last year. (I was active in the Melbourne market last year and saw this happen in the extreme!).
Regards Jason
Personally i dont think people will quickly revert to 'buying in mass' in the near future. Reasons:
1) Credit crisis has made lenders and the securitisation market more conservative. Whilst the lending market should moderate downwards from the current extreems, it will mostly moderate into someform between what we are experiencing now and 'the good old times'.
2) Interest rate rises are on a long term cyclical upturn. Look at history, the 60's was charaterised with low interest rate, the 70's and 80's high interest rates and the mid 90's to now low interest rates. Greenspan, warren buffet and a number of other people have suggested this may be the case.
3) Rents rises have a lot further to go before they neutrify interest holding costs. If you look back on the mid 90's to now, rental ylds were basically decreasing together with interest rates fluctuating around 6 -8%. Out of pocket interest expenses was in the period around 2 -4%. Even with the latest rent increases we are looking at out of pocket interest expense of 4-6%. This is a big 'gap' that will need to be filled.
4)Property affordability is still poor.
If you have property and its securly financed then hold it, but im not buying more property for the moment.
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